When Spanish explorers came to the central portion of the province in the late 18th century, they inquired as to the name of the town. The people replied in Cebuano"walay balay", which means "no house". The Spaniards mispronounced the name and repeated it as "Malaybalay".

It was formerly part of the province of Misamis Oriental as a municipal district in the late 19th century. When the special province of Agusan and its sub-province (Bukidnon) was created in 1907, Malaybalay was designated as the capital ofBukidnon. It was then formally established as a municipality on October 19, 1907 and was created into a city on February 11, 1998 by virtue of R.A. 8490.

Malaybalay City is the venue of the Kaamulan Festival, held annually from mid-February to March 10.